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Home prices rise by 1%

January 30, 2010|By Zain Shauk

Area home prices increased for a sixth consecutive month in November, but the upward trend came as uncertainties remain in the market, according to a monthly real estate report released Tuesday.

Prices in the Los Angeles metropolitan area, which includes Glendale and Burbank, rose a seasonally adjusted 1% between October and November, according to the Standard & Poor’s/Case-Shiller home price index.

That report came a day after the National Assn. of Realtors announced that existing-home sale prices nationwide grew 4.9% between 2008 and 2009, but total sales during that period fell 16.7%.

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The mixed data reflect continued uncertainty in the economy and real estate prices, experts and agents said.

Homeowners have held their properties out of the market over the last year, delaying potential sales and limiting the selection for buyers in hopes that prices stabilize and rise, experts and real estate agents said.

That has left a competitive market for buyers hoping to take advantage of historic drops in real estate prices, which has helped drive up bids for available properties, said Dan Soderstrom, an agent for Dilbeck Realtors in Burbank.

“It’s supply and demand,” Soderstrom said. “In terms of the Burbank market, what’s causing prices to go up, albeit slightly in my opinion, is just not a lot of product on the market.”

Although the phenomenon has resulted in home price increases over a series of months, the recent change locally was not substantial, said Paul Habibi, professor of real estate at the UCLA Anderson School of Management.

“It’s a pretty anemic rise overall, but it’s a rise nonetheless,” Habibi said of the reported 1% increase in November.

The six-month trend of price growth in Los Angeles could have been caused by an increase in purchasing activity leading up to the anticipated end of a federal home-buyer tax credit, Habibi said.

Demand for homes could have been pulled into the six-month period of reported home price increases, leaving fewer possible buyers in the market, even after Congress extended the tax credit offer until April, Habibi said.

That may leave sales sagging in the coming months as buyers not drawn solely by a tax incentive continue to weigh the nation’s economic progress, said Robert Bridges, professor of real estate finance at the USC Marshall School of Business.

“Job creation and employment are the things that are really going to cause people to buy their homes, stay in their homes, make their mortgage payments and all the things that make a healthy market,” Bridges said.

Without job growth and economic expansion, the home market may suffer as government efforts to prevent further real estate trouble come to a close, experts said.

Federal programs aimed at backing mortgages and keeping interest rates low could be exhausted as soon as March, resulting in a jump in rates, Habibi said.

And the expiration of the federal tax credit for home buyers may take another attractive incentive out of the market, he said.

Additionally, the potential of more foreclosures in the months ahead, even in other parts of the Los Angeles region, could affect area home values, he said.

“There’s a tiered effect to all these markets,” Habibi said. “When one of them shifts, the pool of buyers also shifts with it.”


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